Recs

2

America's Drunk on Credit

Listen up, America: You're drunk on credit, and you need help. Now.

According to the latest figures from the Federal Reserve, consumer credit, otherwise known as non-mortgage loans to individuals, rose in June by $10.3 billion to $2.19 trillion. Revolving debt, like credit cards, accounted for $6.65 billion, or roughly 65%, of the increase.

This is wonderful news for those in the credit business. Consider American Express (NYSE: AXP  ) , which recently reported a 14% gain in revenue from card usage. It also issued more than 2 million new cards through partners Citigroup (NYSE: C  ) and Bank of America (NYSE: BAC  ) , which also sport thriving credit card businesses.

But none of that is good for consumers -- and I mean you. You carry a special burden. Like me, you probably owe far more than the American average of $6,250 in debt. And you're paying big interest on what you owe, most likely more than the 13.14% average for credit cards that the Fed reported in May.

What you need is action. Reducing debt will improve your buying power and your margin of safety should an emergency occur. Here are three easy ways to get started:

  • Rank your debts by highest obligation. You'll want to spend any excess moola paying off the debt that charges you the most interest.

  • Call about better rates. Credit issuers hate losing regular payers. They'll often cut your rate to keep you on the leash. Humor these bloodsuckers till your balance is zero, and then drop them like a bad habit.

  • Research balance-transfer deals. Some creditors are intractable; get rid of them with a good balance-transfer deal. You can find several excellent options at Cardratings.com.

Just these three steps will put you on the path to financial freedom. And there's much more you can do, too. For other tips on keeping more of what you have, consider Motley Fool GreenLight. Our new money-management service has everything you to need to help you live richly -- from how to make your credit profile look beautiful, to the best banks for your bucks, to how to dress up your fund portfolio for a luxurious retirement. Learn more today!

Fool contributor Tim Beyers may be back in debt, but he's already making progress toward complete financial freedom. He didn't own shares in any of the companies mentioned in this story at the time of publication. Get a peek at everything Tim is invested in at his Fool profile. Bank of America is an Income Investor pick. The Motley Fool has an ironclad disclosure policy.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 515303, ~/Articles/ArticleHandler.aspx, 12/17/2014 11:17:24 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Tim Beyers
TMFMileHigh

Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At Fool.com, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at timbeyers.me or send email to tbeyers@fool.com. For more insights, follow Tim on Google+ and Twitter.

Today's Market

updated 1 hour ago Sponsored by:
DOW 17,356.87 288.00 1.69%
S&P 500 2,012.89 40.15 2.04%
NASD 4,644.31 96.48 2.12%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/17/2014 4:00 PM
AXP $90.44 Up +2.20 +2.49%
American Express CAPS Rating: ****
BAC $17.26 Up +0.54 +3.23%
Bank of America CAPS Rating: ****
C $52.45 Up +1.28 +2.50%
Citigroup Inc CAPS Rating: ***

Advertisement